The WSJ reports that SEC Chairman Christopher Cox intends to implement a rule championed by previous Chairman Donaldson requiring hedge-fund advisers to register with the SEC. Mr. Cox stated that the rule would be implemented "exactly as adopted."

This must come as quite a surprise to critics such as the writer who blasted Cox in this August editorial as someone who would not maintain the integrity of the financial markets and whose "big contribution to American finance has been helping executives hide their companies' numbers."  According to the writer,

Republicans got sore when Donaldson sided with the commission's Democrats on important 3-2 votes. One involved regulating hedge funds, which are now big enough to move markets.

Donaldson had to defend himself against charges of being mean to hedge funds. "I don't see how, in all good conscience, we could not have taken the step we did to bring this huge amount of money under some sort of surveillance," he told Business Week.

Cox will be another story. Unlike Donaldson, the congressman never actually built a business. Before entering politics, he was a lawyer for corporate crooks.

The writer concluded this rant against Cox by suggesting that hedge funds supported Cox because they knew they'd be "taken care of":

And so this is the man who will now protect us against Wall Street predators.

Anyone up for putting his or her Social Security money in a stock market overseen by Cox?

A recent headline on the new SEC chairman should surprise no one. It read, "Hedge funds cheering for Cox." They, at least, know they'll be taken care of.

As far as I can tell from the editorial, the writer basically concluded that Cox "would not maintain the integrity of the financial markets" because (1) before becoming a politician he was "a defender of corporate crooks;" (2) "In Congress, he sponsored bills to limit the rights of shareholders to sue companies;" and (3) " Unlike Donaldson, the congressman never actually built a business." 

To which I  say:

(1) Defender of corporate crooks? Cox was a corporate lawyer (in the mid-1980s) at Latham & Watkins, one of the top law firms in the world.  Corporate lawyers draft documents, structure deals, etc.  They do not generally "defend corporate crooks."  Cox undoubtedly represented dozens of model corporate citizens in addition to the single bad egg client the editorial is focused upon. 

(2) He sponsored the PSLRA?   So?  The PSLRA is not some universally condemned bill designed to harm shareholders.  To the contrary, many lawyers, professors, bloggers, investors and even reporters believe it was and is a smart piece of legislation.

(3) Didn't build a business? I'm not sure why this is even relevant to whether a regulator will maintain integrity but, in any event, Cox's bio states that he co-founded a publication called Context Corporation that translated the Russian newspaper Pravda into English.

The bottom line is that I don't know much about Cox or what he will or won't do, but I do know that working at Latham & Watkins as a corporate lawyer and sponsoring the PSLRA is no basis for questioning anyone's commitment to maintaining the integrity of the financial markets.